Microsoft drops price of Xbox

Microsoft's Xbox, the highly-publicised games console launched only five weeks ago, is to slash its price by £100 in a bid to boost sales.

The machine, which aimed to rival Sony's Playstation 2, has failed to reap the sales expected for the console and its games.

Microsoft today said it would cut the price to £199 to match the price of Playstation 2. The news is a bitter blow to the US firm, which spent billions of dollars designing and developing the Xbox as well as $500million (£350million) on marketing.

Today a spokesman for a leading video games retailer selling much of the Xbox software said the news would be good for customers. He added: "We were given a certain allocation on Xbox and we sold that in the first few weeks. But today's news will be a catalyst for even better sales in the coming weeks."

The night before the Xbox was launched, parents and children queued all night outside electrical stores and supermarkets in a bid to grab the first new consoles. Industry experts believe the hype has now died down, leaving many new owners wondering why they were charged more for a product that was so similar to Playstation 2.

Many consumers were also unimpressed by the sophistication of many of the games and admitted they preferred those offered by Playstation.